First, this judge is fantastic. One of the best allies we have are judges who have seen foreclosure cases for decades and are wondering why now, all of a sudden, the court’s strict document procedures are being tossed out the window by the plaintiffs:
I suggest you read this document, it’s short and funny by judicial standards. The judge is not happy with Countrywide’s shifting positions regarding the whereabouts of the note:
I am, frankly, appalled at the confusion and lack of credibility of Countrywide’s response to the issue of the note — the possession of the note.
We started out with Ms. DeMartini’s testimony that the note never leaves the servicer. She says that she saw a Federal Express receipt whereby the actual note, the physical, original note was transferred to the Foreclosure Department internally in the same building, but that the note had not yet been located. That’s where we stood at that point. Then we had a submission, the supplemental submission saying the original note has been found and can be available for inspection. It doesn’t say where it was found, who had possession or the like, but it was found and is available for inspection. And then without any explanation, there is a lost note affidavit presented dated February of 2007 indicating that the note cannot be found. No explanation provided. What do I do with that, Mr. Kaplan?
Did you catch that? This is pure Keystone Cops. Countrywide can’t find the note, then says it has located the note, then it submits a lost note affidavit dated BEFORE the date when the note mysteriously appeared!
And better yet, even later, Mr. Kaplan, the counsel for Countrywide, casually mentions that an allonge (a document that is supposed to be so firmly attached to the note as to not be able to travel separately, used to affix additional signatures to a note) was created just for the purposes of foreclosing! That’s an admission that it was well outside the permitted time sequence for the securitization trust.
Mysteriously appearing allonges have become the preferred fix for the failure to convey notes properly to trusts, and the foreclosure attorneys generally have some appreciation for the function it is supposed to serve. The party line is usually “Oh yeah, we found it” with as little further comment as possible. The fact that Kaplan does not understand why this document was created, and makes the damaging admission repeatedly that it was created recently, lends indirect support to the notion that Countrywide wasn’t terribly concerned with adhering to the terms of the PSA unless it rose to the level of being an issue. (If you read the transcript, Kaplan really is clueless, arguing at one point that perhaps Bank of New York, the trustee, reassigned the note back to Countrywide. Huh? He seems intent on foreclosing, and really doesn’t care which entity does it, when believe me, Countrywide does NOT want this foreclosure done in the name of Countrywide, that was the point of creating the allonge).
Bonus points: dig out the diagrams we’ve used before and chart out what just happened in this description. When you actually piece it together, the breakdown in documentation and responsibility is mind-boggling.
Second, this is interesting. From the court record (embedded at Yves’ site):
MR. KAPLAN: Your Honor, I don’t know specifically — I do know — we do know that the — there was an allonge prepared because it was needed. I can only tell you that this note, this — the back page of the mortgage appears to have an endorsement on it. It doesn’t say — it says “pay to the order of.” It’s blank. “Without recourse, Countrywide Home Loans,” and it’s signed, and it’s a rubber stamp, it says “David A. Spector, Managing Director.”
THE COURT: What’s that?
MR. KAPLAN: Your Honor, I can only tell you what the document says. I don’t know who Mr. Spector is.
Luckily, we can find out who Mr. Spector is. From the internet, a picture:
Here businessweek tells us: “[Spector] served as Senior Managing Director of Secondary Marketing of Countrywide Financial Corp. from January 2004 to 2006, where he was responsible for secondary marketing, including interest rate risk management and related functions, directing loan trading, pricing, hedging, and servicing. He served as the Managing Director of Secondary Markets, Countrywide Home Loans, Calabasas, California. Mr. Spector was also responsible for overseeing secondary markets trading execution and related functions. Mr. Spector joined Countrywide in 1990 and served as its Executive Vice President of Secondary Markets and also served as its Managing Director since 2001. ”
And now he’s the CIO of Penny Mac, bio here:
David Spector, as Chief Investment Officer, is responsible for oversight of all activities pertaining to investments, and directs the activities of Portfolio Management, Capital Markets, and Credit as each relates to mortgage credit and company credit risk.
Prior to joining PennyMac, Mr. Spector was Co-Head of Global Residential Mortgages for Morgan Stanley, London, and, previously, Senior Managing Director, Secondary Markets, for Countrywide Financial Corporation where he was responsible for secondary marketing, including interest rate risk management and related functions, directing loan trading, pricing, hedging, and servicing. He was also a member of the Countrywide Asset Liability and Credit Committees, as well as Freddie Mac and Fannie Mae Advisory Committees.
What’s the likelihood that this high-end guy, a senior executive for decades with Countrywide, actually signed this document for a New Jersey bankruptcy in 2007 (or later, depending on what you believe about this document)? What are the chances his name was on a stamp circulating among low-level employees, even after he left? How many stamps? How many are still active even though Spector is with another company? Where are they now?